The release bearing is damaged. The subsequent procedure involves seizing and perforating the clutch cover. You must remove the gearbox and replace the clutch.
Relatively simple to manage them, even when positioned on axle stands. A new clutch costs approximately £120 for a four-cylinder non-air conditioning model (solid flywheel) and somewhat more for a 328i variant. Adhere to reputable brands such as LuK or Sachs. Typically, the 316i/318i/318is models from that year equipped with air conditioning use a twin mass flywheel.